①The energy ministers, finance ministers, and central bank governors of the Group of Seven (G7) held a video conference to assess the developments in the Middle East and their impact on energy markets, the global economy, and financial stability; ②European Central Bank President Lagarde directly challenged US Treasury Secretary Bessent's optimistic view that the economic impact of the Iran war would be short-lived, emphasizing that the effects would persist for a long time.
On Monday local time, the energy ministers, finance ministers, and central bank governors of the Group of Seven (G7) held a video conference. The purpose of the meeting was to evaluate the developments in the Middle East and their impact on energy markets, the global economy, and financial stability.
However, according to informed sources, the atmosphere of the meeting was not as harmonious as indicated in the official statement.
It is reported that Christine Lagarde, President of the European Central Bank, directly questioned the optimistic stance of US Treasury Secretary Scott Bessent during the meeting in front of senior G7 officials - Bessent had previously claimed that the economic impact of the Iran war would be temporary.
Lagarde directly refuted Bessent
According to informed sources, during the meeting, Bessent attempted to downplay the destruction caused by weeks of fighting in the Middle East and stated that various disruptions, including the de facto closure of the Strait of Hormuz, were merely temporary phenomena.
However, European Central Bank President Lagarde directly rebutted this view. She told Bessent, as well as the numerous finance ministers, energy ministers, and central bankers attending the G7 video conference on Monday, that these impacts would last for a long time because much has already been disrupted.
This conflict highlights an apparent increase in tensions between the United States and Europe. As the conflict in the Middle East continues to escalate, international energy prices have surged, critical shipping routes have been disrupted, and Europe has suffered more severe consequences.
The Iran war has significantly 'hurt' Europe
Currently, the economic impact of the Iran war on Europe has become evident: data released this Tuesday showed that the eurozone's inflation rate in March jumped to its highest level since the outbreak of the Russia-Ukraine conflict in 2022. At the same time, eurozone governments are significantly lowering their economic forecasts, hoping that what they originally envisioned as a year of economic recovery does not ultimately turn into an economic recession.
Bessent has recently sought to ease public concerns about the conflict. He stated that the oil market is well supplied and noted that the strait between Iran and other Gulf states will eventually reopen.
However, Lagarde clearly disagrees. She has been issuing warnings that the severe scenario envisioned by the European Central Bank—based on energy supply disruptions lasting until the end of 2026 and significant infrastructure damage—could lead to a eurozone inflation rate of 6.3%.
In a subsequent interview, Lagarde reiterated: 'We are facing a real shock—one that may exceed what we can currently imagine.' In terms of oil extraction, refineries, and distribution, 'there has already been too much disruption, and it simply cannot be restored within a few months.'
Is the transatlantic relationship deteriorating?
In fact, this is not the first time Lagarde has clashed with U.S. officials this year. In January, she walked out during a speech by U.S. Commerce Secretary Howard Lutnick at the World Economic Forum because she felt his anti-European remarks were 'excessive.'
Earlier this month, EU High Representative for Foreign Affairs and Security Policy Karlas warned that Washington’s attitude toward Europe has become 'increasingly hostile,' with the Trump administration employing tactics typically used by adversaries of the EU to 'divide Europe.'
Karlas stated: 'I believe it is important for everyone to understand that the U.S. has made it very clear that they want to divide Europe. They do not like the EU.'
Monday's call was part of global efforts to ease the current situation, with some G7 member governments deciding to release emergency oil reserves.
In a public statement, the G7 expressed readiness to take 'all necessary measures' to 'maintain stability and security in energy markets.' They also acknowledged the importance of 'coordinated international action' in mitigating spillover effects and ensuring macroeconomic stability.
Editor/Doris